Homework Answers
5.
NPW of machine X = -110000 - 4500 * (P/A, 15%,12)
= -110000 - 4500 * 5.420619
= -134392.78
NPW of machine Y = -210000 - 1050 * (P/A, 15%,12) + 39000 * (P/F, 15%,12)
= -210000 - 1050 * 5.420619 + 39000 * 0.186907
= -208402.27
As Net present cost of X is less, it should be selected
2
i = 12% / 4 = 3% per quarter
t = 5 yrs = 5*4 = 20 quarters
Present value to be invested = 10000 * (P/F, 3%,20) = 10000 * 0.553676 = 5536.76
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